Sozidaniye in Russia

In 1989 MEDA explored possibilities of working in the Soviet Union, and found great openness to the idea of helping churches, especially in regards to a business/faith connection. MEDA also wanted to model new opportunities by developing actual businesses; to support restructuring by demonstrating the viability of market-based relationships; and to facilitate positive East/West relationships.

MEDA accomplished these goals by working with the Association of Christians in Business (ACB) to provide training courses on various aspects of small business creation and management.

A natural follow-up to MEDA's work with ACB was the creation of a new entity called Sozidaniye (Russian for "creation"). MEDA saw that training was no longer the issue most constraining growth and development, but a basic need was a place to work. As a result, Sozidaniye obtained a piece of factory space outside of Moscow which it subdivided into offices and production space for start-up businesses. Any small business was eligible for the incubator as long as it was locally owned, benefited the local economy, and was not involved in unethical enterprises. Clients also benefited from basic business training offered by Sozidaniye.

About half of the tenants were also clients of Sozidaniye's credit program, which had additional clients off-site. The typical Sozidaniye client required a loan of about $9,000, usually for working capital.

Despite the fact that Sozidaniye received a formal request from the City of Moscow to help establish another much-larger incubator adjacent to the original site, the rising tide of corruption became too much for MEDA. Unable or unwilling to grasp that MEDA's Russian operation made no profit, the "tax police" gave notice that they intended to levy crippling fines and taxes on the capital injections that funded Sozidaniye. In 1997 MEDA staff left Russia and MEDA's direct involvement in Sozidaniye drew to a close the next year. Today, it exists as an indigenous agency operated by local authorities who are charged with "spreading the word" about the importance of the small business sector.

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His business soared with MEDA's help

Sozidaniye's first tenant was Mikhail Serebryani, a fledgling Russian baker who had just invested in a new oven but needed help selling his bread. His company, Galer Bakery, was barred from regular walk-in stores which were dominated by state-owned factories. He needed a new way to get bread to the distribution points while it was still hot.

Serebryani requested a loan of $20,000 to buy used delivery vehicles and mobile kiosks. Sozidaniye went him one better. Instead of helping him buy used equipment, which was heavily penalized by Russian tax law, Sozidaniye set up a sale-leaseback arrangement. As a result Galer was able to purchase two delivery vehicles instead of one, four mobile trailer/kiosks instead of two, and grain for the winter.

Within a short time Galer's payroll doubled as 20 new employees were added. By 1997 the bakery was working around the clock to produce 17 different bread products. Staff had soared to 90.

Serebryani like the incubator's friendly atmosphere. "And it's helpful to have access to other services in the building, like accounting and building companies," he said. (Excerpted from The Marketplace Anniversary Issue, November-December 2003)

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